Final Research Results Supported by the KFAS
International Scholar Exchange Fellowship program, 2007-2008
COMPARATIVE STUDY ON VIETNAMESE AND KOREAN BUSINESS CULTURE
AND THEIR IMPACT ON KOREAN COMPANIES’ PERFORMANCE IN VIETNAM
Researcher: Dr. Nguyen Anh Hoang
Foreign Trade University, Hanoi, Vietnam
Host Scholar: Professor PARK,WON-WOO,
Faculty Human Resources Management & Organization Behavior, College of Business
Administration, Seoul National University
The date of submission: August 14, 2008
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Abstract:
“All people on the world are the same, only their habits are different” (Confucius). Or “All
people on the world are the same, only their cultures are different”, because “culture is the
collective programming of the mind which distinguishes the members of one group or
category from another” (Hofstede, 1997). The culture differences affect deeply all aspects of
people’s lives, including business relation. Vietnam and Republic of Korea have a long term
and friendly relation. Nowadays Korea ranks first of all countries investing into Vietnam with
a great success. But at the same time, some conflicts were arising, making a negative influence
on the companies’ performance, partly because the people from both countries still do not
understand the cultures and business cultures of the partner. Based on a survey of 110 Korean
companies, the paper provides an overall view of present Korean investment in Vietnam and
the influence of business culture on companies’ performance. Finally, it will provide some
useful implications for Koreans and Vietnamese in doing business with each other!
Keywords: business, business culture, collectivism, communication, culture, decision making,
equality, femininity, gender discrimination, investment, individualism, Korea, leadership,
management, masculinity, organization culture, power distance, uncertainty avoidance,
Vietnam.
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TABLE OF CONTENT
Abstract
Introduction and Problem statement
Major contents and scope of study
1
2
3
4
4.1.
4.2.
4.3.
5
5.1.
5.1.1.
5.1.2.
5.2.
5.2.1
5.2.2.
5.2.3.
5.3.
5.3.1.
5.3.2.
5.3.3.
5.3.4.
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Differences between this study and existing studies
and anticipating study results
Methodologies for study
Data collection and sample
Data presentation, analysis and results
The questionnaires
The research results and interpretation
Some features of cultures of Vietnam and Korea
Vietnamese culture
Korean culture
Comparison of Vietnamese and Korean business
culture
Vietnamese business culture
Korean business culture
Comparison of Vietnamese and Korean business
culture
The impact of business culture on Korean
companies’ performance in Vietnam
An overview of Korean Investment in Vietnam
Evaluation of Korean investment into Vietnam
An overview about Korean companies’ performance in
Vietnam
The impact of business culture on Korean companies’
performance
Discussion and Conclusion
Reference
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4
6
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Comparative study on Vietnamese and Korean business culture and their impact on
Korean companies’ performance in Vietnam.
Researcher: Dr. Nguyen Anh Hoang
Foreign Trade University, Hanoi, Vietnam
Host Scholar: Professor PARK,WON-WOO,
Faculty Human Resources Management & Organization Behavior ,
College of Business Administration, Seoul National University
1. Introduction and Problem statement
According to Krober and Kluckhohn, there are more than 160 definitions of culture. In this
paper, the usage of the word culture corresponds to the definition of Geert Hofstede, who
states that culture is “the collective programming of the mind which distinguishes the members
of one group or category from another…” (Hofstede, 1997). Culture is man-made,
conventionalized and passed on for young people. Culture is not only passed on from parents
to children, but also through social organizations, cultural associations, from governments to
schools and churches etc. Common way of thinking and behaving that are develop and then
reinforce through social pressures and tendency. This is defined by Hofstede as “mental
programming”. Based on the definition, we can consider business culture as “the collective
programming of the mind which distinguishes businessmen of one country from another,
creates a common way of thinking and behaving for businessmen and customers in the
country”.
Over the last decades, as the result of globalization, the world has become smaller by the
improvement of transportation and information system. The exchange relation between
countries and people from very far parts in the world has become easier. But the behaviors,
values and attitudes that govern human interaction remain relatively unchanged.
Technological innovation has boosted up the internationalization of business, and individuals
at firm level have become more involved in cross - cultural interaction. When the world is
connected as one unique market, cultural sensivity in varying degrees has become essential
skill for every businessman. In this new environment, lack of cultural knowledge can lead to
frustration of negotiations worth million of dollars, contract losses and poor customer relations
so that cultural incompetence often proves to be disastrous (Czinkota, 1998). However,
differences in culture can lead to innovative business practices, faster and better learning
within organization and sustainable sources of competitive advantages when understood and
successfully managed. Interaction in the multi-cultural environment can help businessmen
become more dynamic. When we like to use this advantage, first of all we must be aware that
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the differences in culture will lead to differences in business style. If we understand this
difference, we will understand the points of view of the counterpart and look for the best
solution for cooperation.
Vietnam and Republic of Korea (since now it’s called Korea) have a long term and friendly
relation and the business relationship between two countries has been developed very fast
recently. Both countries have made some impressive economic development. Famous as the
“Miracle on the Han river”, the “second Japan”, one of four new dragons in Asia, Korea has
bounded into the world market and emerged as one of the world’s newest, most dynamic
economic power. Only in 30 years – form 1961 to 1991 - Korea GDP per capita has increased
from $82 to $5000, more than 60 times1. From 1962 to 2007, Korea's Gross Domestic Product
(GDP) increased from US$2.3 billion to US$969.9 billion, with its per capita GNI soaring
from $87 to about $20,045 2 . Originated from poor agricultural country, nowadays Korean
exports mainly consist of high – tech productions, such as: electronic products, machinery and
transport equipment, semiconductors, wireless telecommunications equipment, computers,
steel, ships and petrochemicals 3 . Three decades later, Vietnam has gained some very
impressive successes, too. From 1990 to 1997, Vietnam’s annual GDP growth achieved
around 8% and continued at around 7% in period from 2000 to 2005, making it the world's
second-fastest growing economy4. In 2006, GDP growth was 8.17%, the second fastest growth
rate among countries in East Asia and the fastest in Southeast Asia5. As a result of several land
reform measures, from a country with serious food shortage, Vietnam is now the second
largest rice and coffee exporter in the world6. In 1990, GDP per capita per PPP of Vietnam
was only 942 USD, belonged to the 20 countries with lowest GDP per capita7; in 2005, the
number was 3,393 USD, ranking 122nd out of 179 countries and territories. The nominal
GDP per capita was 809 USD, ranking 141st on the list.
Being descended from a similar situation, sharing many cultural values, nowadays Republic of
Korea became one of the biggest partners of Vietnam, both in trade relation and FDI field. But
on the other hand, along with development of those relations; some conflicts are arising,
especially in Korean companies (KC) in Vietnam, obstructing our business relation fully
developing to match the potential of both countries. One of the reasons is that the people from
1 Lee, Sang M. and other, Korean Cheabols: Corporate Values and Strategies; Organizational dynamics, 00902616, Spring 91, Vol.19, Issue 4
2 http://www.korea.net/korea/kor_loca.asp?code=R01
3 http://www.economywatch.com/world_economy/south-korea/export-import.html
4 Report of Ministry of Finance, Vietnam, 2005.
5 IMF Country Report No. 06/448, Vietnam: Selected Issues, 2006
6 http://www.agro.gov.vn/news/newsdetail.asp?targetID=5322
7Klaus E Meyer, Yen thi Thu Tran and Hung Vo Nguyen 2006, Doing business in Vietnam, Thunderbird International Business Review, Vol.48(2) 263 - 290. March – April
2006.
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both countries still do not understand the cultures in general and business cultures in particular
of the partner. In FDI companies, where people with difference level of education and
difference language have to work together every day, the knowledge of the partner’s culture
become especially important factor to contribute on the success of business. Through this
study, we aim to find the answers to the following questions:
 What is the current status of the Korean investment into Vietnam?
 What are differences and similarities between Vietnam and Korean business cultures?
 How do the business culture influence on the Korean companies’ performance in
Vietnam?
 How to improve the performance of Korean companies’ performance in Vietnam?
Studying business culture of Vietnam and Korea, discovering similarities and differences
between those cultures and their impact on Korean companies’ performance in Vietnam is the
aims this research is heading to. Theoretically, this research will contribute to the growing
body literature about business relation between Vietnam and Republic of Korea by providing a
new approach from the view of culture. Practically, this research will offer insight into how
cross – cultural issues have influence on business relation between two countries, and then
provide implications for Vietnamese and Korean in order to carry out their business
successfully. As a result, this research can help to enhance business relation between our
countries.
2. Major contents and scope of study
The research would be divided into 3 parts, as some details as following:
 Introduction of Vietnamese and Korean business culture
 Vietnamese business culture
 Korean business culture
 Comparison of key features of business culture between Vietnam and Korea
 Impacts of business culture on Korean companies’ performance in Vietnam
 Overview of Korean JV performance in Vietnam
 Findings and interpretation
 Discussion and conclusion
3. Differences between this study and existing studies and anticipating study results
The first author studying culture influence on business was Gert Hofstede with the book,
named “Culture and organization”. After that there are many literatures exploring the impact
of elements of culture on business (Charles W.L.Hill, 2003), cross - cultural business behavior
(Richard R.Gesteland, 1996), or impact of work culture on organizational performance
(Thomas Rollins & Darryl Robert 1998)... Recently, there is a new trend, which studies
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intercultural and cross - cultural management with some remarkable researches, such as
International & Cross – Cultural Management Research (Usunier 2005), Management across
border and culture (Helen Deresky 2000)… Maybe the broadest research is Culture,
Leadership and Organizations – The Globe study of 62 countries (Robert J.House and
collective 2005), in which a survey of impact of culture on business was made in 62 countries,
included South Korea. All these researches focus on impact of culture of leadership,
management and organization but the influence of culture on joint –venture’s performance
remains unclear. Especially, until now is there not any research studying Vietnam business
culture and business culture’s influence on Korean companies’ performance in Vietnam.
4. Methodologies for study
This research is conducted using the following methods:
 Desk study: using published materials as books, newspapers, trade journals, Internet...
 Survey method
 Depth interview (Korean and Vietnamese experts, International commercial business
people/managers…)
 Comparative methodology
4.1. Data collection and sample
In order to obtain the best results, we were carrying out a survey and interviewing persons
from Korean companies’ in Vietnam and some headquarters in Korea. To obtain more answer
sheet, we have sent the questionnaire to Hanoi, Haiphong, Dongnai, Ho Chi Minh City and
Binhduong, where are the big industrial zones, attracting large number of Korean companies.
Companies, selected for the survey, are: Korean companies, operating in Vietnam, either joint
venture or Korean owned companies. The companies are categorized by three criteria:
 The rate of Korean share in company’s capital.
 The period of companies’ operation in Vietnam (two years, from two to five years
and longer than five years), in order to analyze the influence of duration of business
relationship in each dimension of business relationship.
 Type of products and services: companies are divided into several different sectors,
such as: Automobile, Electronics, Garment/Textile, Real property, Construction, other
manufactured products and others.
Data collection was conducted in the period from November 2007 to March 2008. Information
collection was conducted in two stages:
 Stage 1: We sent pre – testing questionnaire to 10 companies in Korea and in
Vietnam.
 Stage 2: Based on the findings, we re-designed the questionnaire and then sent it to
all companies on the list. .
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Because during the time, the author had stayed in Seoul - Korea and she could have approach
only to some Vietnamese and Korean people, working in Korea. For the rest, we should hire
Quang Minh Company, a survey company to send the questionnaires and get back the answer.
It is very costly but it was the only way to collect data at the time.
In fact, there were more difficult to obtain answer sheets than we expected. With long term
experiences in doing survey, we have known that Asian people, especially business people
don’t like to take part in any survey. It was one of the reasons for hiring the professional
company in doing survey, because we can rely on their relationship. But it was even more
difficult with Korean people. Though we have to create some relation with them, it happened
more than one time that when we came to give them the questionnaire or ask for an interview
and got the negative answer, or they were very reluctant in giving back the answer sheet. Due
to the fact, the survey took longer time than in plan, after more than 4 months we got 120
answers. 10 of which were eliminated because of answering only partly of questionnaire or
answering in disorder, then 110 answers were used for analyzing.
We also conducted 10 in-depth interviews with people who are working in Korean companies,
included 8 of Vietnamese people and 2 with Korean people. The information collected by
those interviews is very useful in complement with information collected by questionnaire.
4.2. Data presentation, analysis and results
In 110 valid answer sheets, there were 75 answers from Vietnamese people and 35 of Korean
people. The analyzing as below:
Table 1. Respondent ID
Countries
Vietnam
Korea
Total
Frequency
75
35
110
Percent
68.2
32.8
100
Valid percent
68.2
32.8
100
Cumulative percent
68.2
100
4.3. The questionnaires
The questionnaire was simplified from the Form Alpha, consisting of Organizational Culture
Values and Practices items from “GLOBE National Culture, Organizational Culture, and
Leadership Scales” by Robert J.House and collective. That is, we first defined the various
culture aspects that we wanted to measure, such as well as specified the general nature of these
aspects before items were written. The selection of the aspects and definitions of the culture
dimensions were developed after a review of the culture literature and taken from practice.
The original form Alpha has 5 sessions with more than 150 questions, but after testing we
decided to design our questionnaire with 4 sessions, including: 1) General questions mostly for
companies categorizing; 2) “the way things are in your company”, concentrating in
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communication, organizational culture, decision making and leadership issues; question; 3)
summarizing questions to get an overview of respondent’s idea; 4) questions about the
respondent. In order to obtain the accurate answer, we tried to design the questionnaire not to
long (the main part has only 24 questions) and concentrated in very concrete matter in
respondent company. The Likert scale of classical five levels was used in the questionnaire.
The following analysis tools are used to analyze the data:

Descriptive and T-Test analysis tools are used to analyze the ideas of companies
about each dimension of culture, the T-Test also helps to identify the differences of ideas of
companies about each dimension in consideration.

Independent T-Test and Histogram analytical tools are used with different group
of companies in order to find out how different the ideas and perception of companies
regarding the criteria of culture.

Correlation analysis tool is used to identify the relationship and influence among
the dimensions of culture. Basing in the finding from relationship, conclusions and
suggestions will be proposed to improve Korean companies’ performance in the future.
5. The research results and interpretation
5.1. Some features of cultures of Vietnam and Korea
5.1.1. Vietnamese culture
Vietnam is located in Southeast Asia with hot and humid climate, raining and monsoon.
This condition is favorable for development of wet rice farming long time ago. Vietnam is also
a intersection of two large civilizations of the world, which are China and India. Influence of
these two cultures (especially Chinese culture) is remarkably seen in the culture of Vietnam
(Tran Quoc Vuong, 1990).
Some researchers believed that Vietnam culture was formed in the fourth millennium
B.C. (according to Tran Trong Kim, it was in 2789 BC), under the Van Lang King of Hung
Kings dynasty (Tran Quoc Vuong 1990). At that time, ancient Vietnamese already know how
to cultivate wet rice and were famous with bronze drum casting, such as Dong Son Bronze
Drum. From 111 B.C to 938 Vietnam was under China domination. During this period,
Vietnamese absorbed selectively aspects from Chinese culture, such as Confucius, Buddhism
and old Chinese writing character. French came to Vietnam from 1850, and the culture of
Vietnam also changed to another stage, the stage of interaction with Western culture, mostly
with French culture. During this period (from 1958 to 1954), the Vietnamese culture intersect
with the elites of the Western culture, such as Latin characters, music, drawing, literature,
trade, science and technology etc. Western ideology on freedom, democracy and equality were
accepted and disseminated by local intellectuals to all population classes. From 1954, after
seizing independence, the Vietnamese culture in the North was intersected with Eastern
European culture, typically Russian culture. The achievements of the Russian culture at that
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time such as literature, music, science and technology… and the values of the Marxism and
also the results of the Western civilization were introduced deeply to the lives of Vietnamese
through Russian translated version. During this period (1954-1975), the South of Vietnam was
affected by the Western culture, especially the American culture. Through this interaction, the
South Vietnam absorbs cultural values such as pragmatism and individualism…. However,
those interactions are still one-way, limited to a small number of classes and rather
theoretically than through direct communication. The culture integration became more deeply
only after 1991, when Vietnam entered “Doi moi” (renovation) period. The opening of the
economy and interacting with outside world has effected significantly to culture, society and
economics in Vietnam. Therefore the Vietnam economy has change significantly. The most
significant example is, before “renovation” Vietnam still had imported rice, and become an
rice exporter after that, but since 2002, Vietnam became the second largest rice export country
in the world. As a result of those changes, new values of cultures have occurred and stabilized
in the Vietnam culture. Therefore, Vietnam culture in general, and business culture is in
process of remarkable changing, of which researchers and managers should to be aware.
Two religions, which play important roles in Vietnam are Confucius and Buddhism.
Buddhism was brought into Vietnam at a very early stage, about in 2nd – 3rd century B.C. and
has deeply embedded in the ideas and emotion of Vietnamese people. Even though many
people do not follow Buddhism officially, they are still affected by Buddhist dogma and extol
virtues such as benevolence, assistance to others, faithfulness, gratefulness, modesty,
simplicity and altruist… However, Buddhism does not respect materiality and therefore also
does not encourage business.
Confucius was brought to Vietnam later, but has strong affect on the organization of
Vietnam society, such as respecting of the ranks in society, collectiveness, extol honesty,
loyalty, saving and hardworking. Different from other Northeast Asia countries such as China,
Korea, and Japan…which also are affected by Confucius, but they know how to exploit the
positive aspects of Confucius for business development, Vietnamese feudalism on the other
hand exploited the passive aspects of Confucius for business. The order in the social system is
“intellectuals, farmers, workers and businessmen”, which regards businessmen as the lowest in
the society. Furthermore, the education system with the idea : “All jobs are bumble, only
reading books is noble” had help to engrave thinking “Develop agriculture and restrain
trade” in thinking of Vietnamese people. Trade and businessmen were despised. In addition,
due close policies of the feudal dynasties, the international business of the Vietnam economy
was not developed. Under the influence of Confucianism, education in Vietnam is very
important. Western people were very surprised to know that, despite the low income, many
parents in Vietnam could invest a big money for their children’s education. It makes Vietnam
to become a promised market for foreign Universities.
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The official language of Vietnam is Vietnamese, which is mother tongue of Kinh
people, a ethnic majority group in Vietnam. Since the French domination period, the official
writing characters are Latin characters, imported to Vietnam by European missioners and
reorganized in Vietnam. Due to interaction between Vietnamese and Chinese cultures,
Vietnamese absorbed and acculturate many Chinese words, which nowadays are called SinoVietnamese words. Originated from a agricultural culture, with poorly developed business and
industry, the Vietnamese culture focused more on literature and poems than laws, techniques
and business. Therefore, Vietnamese is rich of words relating to feelings, mood, weather
(there are about 45 versions of word “rain” in Lac Viet Dictionary to reflect different kinds of
rains, this shows that rain is very important for cultivation in Vietnam). On the other hand,
Vietnamese are shortage of words on science, technology and business. Therefore, from 20
century, Vietnamese borrowed a large number of words from French, Russian and
English…This process of modernizing language is still new and not quite acculturated,
therefore, with one foreign word, people could understand differently in Vietnamese. This is a
big obstacle for Vietnamese in communicating with foreign businessmen.
The Vietnamese language, similar to other languages in Asia, is high context language.
The meaning of the message is not only understood through words, but also through the actual
situation of communications. Therefore, same message might be understood differently in
different context. Context also depends on age (the same message would have different
meaning if it is communicated from older to younger and vice verse, or between the same age),
positions, and gender (women might have different way of communications than men)…
Vietnamese normally does not want to hurt the feeling of the counterpart; therefore they try to
avoid refusing or criticizing directly. Therefore, the word “No” is rarely used in
communication.
Body language is not popular in Viet Nam. Vietnamese does not frequently use body
language in communication and also does not look straight to the eyes of the counterpart while
communicating. Especially, loud or fast speaking or interrupt others while speaking are
extremely not desired during communication. On the other hand, Vietnamese culture is
moderate and therefore there are fewer taboos in communication than other Asian cultures
such as Chinese or Japanese…
Vietnam is also famous with its hospitality. Therefore Vietnamese is declined to give
and receive gifts. Gifts might have different meanings, such as to express sympathy,
gratefulness… Appearance and value of the gifts depend on the persons and purpose of giving
gifts. In business, gifts are given mostly at the opening of business or new years…However,
this habit can create difficulties for foreigners who first enter to business in Vietnam.
5.1.2. Korean culture
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The Korean Peninsula lays southward from the eastern end of the Asian continent. It is
about 1,020 km long and 175 km wide at its narrowest point. Mountain covers 70% of the land
mass, making Korea one of the mountainous regions in the world. The local climate is
relatively temperate, with precipitation heavier in summer during a short rainy season and
winters that can be bitterly cold. The ground and climate are not very suitable for agriculture,
and then Korea used to be one of the poorest countries in Asia. The same as Vietnam, Korean
history is history of patriotic wars, mostly against Chinese and Japanese invasion. The last
Japanese invasion of the peninsula started in 1910, ended the Joseon Dynasty and lasted till
the end of the World War II. But since the time, Korea was divided into two parts: North
Korea and South Korea. After the Korean War in 1953, tireless post war reconstruction efforts
in South Korea were highly successful in bringing out the national prosperity. Nowadays, the
South Korean economy is highly developed and one of the four largest in Asia and 13th
largest in the world8.
Korea is one of the oldest continuous civilizations in the world with about 5,000 years
of history 9 . The current political separation of North and South Korea has resulted in
divergence in modern Korean cultures; nevertheless, the traditional culture of Korea is
historically shared by both states. Korea is famous for being one of the most homogenous
countries in the world; there is only one nation, one language, without affinity for strangers 10.
Similar to Vietnam, while being under extensive influences from China, Korea has managed
to retain a distinct cultural identity and was never in danger of being culturally absorbed by its
larger neighbor11. Although Chinese culture had a dominant influence on Korean culture for
centuries, its influence has been steadily weakening in 20th century12. The 1st important factor
that Japan had invaded and kept control in Korea for 36 years, (1910 -1945). After the Korean
War, the effect of industrialization and democrat ion has been spreading throughout the
society. During the process, many Western cultural values, especially values from USA, were
brought and spread out in Korean society. The recent emphasis on globalization and
internationalization has further accelerated the pace of change. All these factors have had a
profound impact on Korean culture.
Religion in Korea encompasses a number of different traditions. Buddhism,
Christianity, Confucianism, and traditional shamanism all play a role in Korea's religious
tradition. Buddhism came to Korea from China relatively early, during the Three Kingdoms
8 IMF (2007). "World Economic Outlook Database, October 2007
9 http://media.graniteschools.org/curriculum/korea/history.htm
10 Chang Sup Chang and Nahn Joo Chang, The Korean Management system – Cultural, Political, Economic Foundations, Quorum Books, Westport, Connecticut, London
1994.
11 John K. Fairbank, Edwin O. Reischauer & Albert M. Craig (1978). East Asia: Tradition & Transformation. Houghton Mifflin Company, Boston. ISBN 039525812X.
12 Kae H. Chung and other, Korean Management – Global Strategy and Cultural Transformation, Walter de Guyter, Berlin – New York 1997.
12
period (fourth to seventh centuries A.D). In Goryeo Dynasty (918 -1392) it was claimed as
state religion till Joseon dynasty, when the persecution of Buddhism carried out by the early
Joseon Dynasty kings. Confucianism also was brought to Korea from China in early centuries,
but it occupied a subordinate position. Since Joseon dynasty (1392 -1910), it was accepted as
the state ideology and became a dominant religion in Korea. Christianity has been brought to
Korea in the late 18th century by the European missionaries but has large followings, both in
Protestant and Catholic Church.
Nowadays just more than 40 percent of South Koreans profess religious affiliation.
That affiliation is spread among a great variety of traditions, including Buddhism (34%),
Christianity (30%), Confucianism (0.2%), and shamanism. These numbers should be treated
with some caution; however, as (with the exception of Christianity) there are few if any
meaningful distinctions between believers and nonbelievers in Buddhism and Confucianism,
which comprise more of a set of ethical values than a religion. The cultural impact of these
movements is far more widespread than the number of formal adherents suggests. Besides,
there are some other religions, such as Shamanism, Cheondogyo, Muslim and Bahá'í ... co
existing in Korea. Koreans, like other East Asians, have traditionally been eclectic rather than
exclusive in their religious commitments. Their religious outlook has not been conditioned by
a single, exclusive faith but by a combination of indigenous beliefs and creeds imported into
Korea. Confucian values are widely accepted within Korean people, without distinction of
religion. Traditionally, Confucianism could discourage people from engaging in commerce
and manufacturing jobs, but in 20th century, the anti-industrial element has been gradually
moderated by the Western values of capitalism 13. As a result, new Confucian values have
emerged as a combination of the education – minded and group – oriented values of the East
and the pragmatic and economically – oriented values of the West. The new values are usually
acknowledged as: emphasis on education, consensus formation, strong affirmation for
commercialism, strong leadership for government and group oriented economic goals (Chung
and Lee 1997).
The official language in Korea is Korean (한국어/조선말), with about 80 million
Korean speakers, with large groups in Australia, Brazil, Canada, China, Japan, the United
States, CIS (post-Soviet states), and more recently the Philippines. The genealogical
classification of the Korean language is debated. Some linguists place it in the Altaic language
family, while others consider it to be a language isolate. Like Japanese, the Korean language
was influenced by the Chinese language in the form of Sino-Korean words. Native Korean
words account for about 35% of the Korean vocabulary, while about 60% of the Korean
vocabulary consists of Sino-Korean words. The remaining 5% comes from loan words from
13 Kae H. Chung and other, Korean Management – Global Strategy and Cultural Transformation, Walter de Guyter, Berlin – New York 1997.
13
other languages, 90% of which are from English14. In old time, Korean people used Chinese
character to write but since 1443, a group of scholars under the patronage of King Sejong the
Great developed the Korean alphabet (Hangeul) and it has been using widely till now. Maybe
the fact that Korean is language isolate, using it’s own alphabet than Latin, learning foreign
languages, especially English, is rather difficult for most of Korean people. In general,
speaking foreign languages is not very common in Korea and it could be an obstacle for
foreigners, who first enter to business in Korea.
The Korean language, similar to other languages in Asia, is high context language. The
meaning of the message is not only understood through words, but also through the actual
situation of communications. Koreans are general soft –spoken and stress on being polite.
“Saving face” is an important concept in Korean business culture. People should remain cool,
never appear to be upset, never admit to not knowing the answer to a question but should fin
the way to delay to respond. To avoid hurting the feeling of the counterpart, the word “No” is
rarely used in communication.
Body language is not very popular in Korea, too. In meeting, it is customary to nod, bow
or shake hand. For meeting with high position people, you should use both hand in shaking
hand. Eye contact is not very common, because it may be considered as confrontational.
Korean people are very serious, then foreigner should be careful in communication to avoid
offend them.
Gift giving is very common in Korea, especially in business practice. But unlike
Vietnam, gift giving in Korea should follow the social rules to avoid to offend the counterpart.
For instance: gift should be brightly wrapped, should come from the giver’s country; gift
should be of good quality but not very expensive or elaborate… It could be difficult for
foreigners, who first enter to business in Korea.
5.2. Comparison of Vietnamese and Korean business culture
In making comparative study of Vietnamese and Korean business culture, the biggest
obstacle is till now; Vietnam is not included in any profound research, such as Hofstede,
Trompenaar or Robert J.House, while the Korean business culture is included in all of them.
Maybe the most acknowledged research in business culture is the four dimensions of culture
by Hofstede. He classified cultures into four dimensions: power distance,
individualism/collectivism, masculinity/femininity and uncertainty avoidance. Latterly, he
added the fifth dimension: Long term/short term orientation.
Because Vietnam was not included in the list of 53 countries studied by Hofstede, then
we will use some indicators of other Asian countries to help readers in estimating the
14 Sohn, Ho-Min. The Korean Language (Section 1.5.3 "Korean vocabulary", p.12-13), Cambridge University Press, 2001. ISBN 0521369436
14
Vietnamese indicators. In reality, the differences between cultures are much more complicated
than these four dimensions used by Hofstede. But those indicators can provide an overview for
deeper study of business culture of Vietnam and Korea later.
Table 2: Cultural dimensions of Korea and some other Asian countries
PD (104)
IN (91)
MA (95)
UA (112)
China
80(H)
20(L)
66(H)
40(M)
Thailand
64(M)
20(L)
34(M)
64(M)
Taiwan
58 (M)
17(L)
45(M)
69(M)
Vietnam (e)
M
L
M
M
South Korea
60(M)
18(L)
39(M)
85(M.H)
Sources: Hofstede1997
Notes:
PA: Power distance
H: high level
M: medium level
IN: Individualism
MA: Masculinity
UA: Uncertainty avoidance
L: Low level
MH: medium high
(e) estimated for Vietnam
5.2.1. Vietnamese business culture
In the part, findings from three surveys were used to describe Vietnamese business
culture, such as:
-
“Study on the influence of culture on Business relation between Vietnam (VN) and
Korean countries (SCs)”, conducted in 2005, surveyed 103 Vietnamese and Korean
companies by Nguyen Hoang Anh and Nguyen Van Than, supported by DANIDA.
-
Survey about “The value system of Vietnamese culture and it’s implication for
managers”, conducted by Vu Bich Thuy and Nguyen Van Chan, French- Vietnamese
Centre of Management Education in Hanoi (CFVG survey) in 1995-1997 with 550
people in Hanoi and Ho Chi Minh City.
-
Survey “Seeking social – psychological factors, preventing entrepreneurship in
Vietnam”, conducted by Tran Huu Quang, Saigon Economics Times No1 2004.
The descriptive method was used to analyze data taken from those surveys.
15
 Power distance: As in many other Asian countries, Vietnamese business culture has
higher power distance, with a ranking based on two factors: position and age. Usually,
subordinates are expected to listen to the superior. But the relationship between Vietnamese is
more complicated. There are many pronouns in Vietnamese in communication, based on
gender, age difference, family relation, etc, so they can call their colleagues as younger/older
brother, younger/older sister, younger/older uncle, younger/older aunt, or even
grandfather/grandmother! Therefore it could be hardly for the boss, if he wants to criticize a
subordinate, when he has to call him “Uncle”... Usually even director should pay many
respects to senior subordinates, especially when they have worked for the organization longer
time! In state sector, where lifetime employment is still very popular, subordinates could pay
more respect to their boss. But in private sector and foreign enterprises, where job fluctuation
is more popular, the power distance between boss and subordinates could be lower. Because
education is one of key factors for getting job or being promoted in Vietnam, then it could be a
mean to get into higher hierarchical level, but it is not the direct factor in power distance.

Uncertainty avoidance: Another factor in Vietnamese business culture is
uncertainty avoidance. In CFVG survey in 1996-1997, 83% respondents said that stability is
the most important factor for choosing a working place.15 Till now, despite of low wages and
stagnate working environment, the state sector is still considered as a good working place for
offering lifetime employment. Since preferring stability, many Vietnamese businessmen tend
to work with old partners; even they can earn less profit. One of the most reliable relation in
Vietnam is blood – line. Family in Vietnam is very important, nobody can neglect it. Then it is
very common to get job through some family relations, even it is forbidden in state sector. In
private sectors, when the owner usually is the director, most of them feel secured only when
they can employ people in blood-line with them or people from their home province, because
they think they can believe these employees better. Then one more time, we can see the role of
relationship. “Knowledge and relationship are two basic competitive advantages for
enterprises in Vietnam. While in other countries, knowledge should be considered as the most
important factor, Vietnamese enterprises rely more on relationship and knowledge is ranked
only as the 2nd factor” (Napier and Thang, 1997). In another survey, conducted by Tran Huu
Quang in Ho Chi Minh City in 2003, 41% respondents agreed that “One could not be
successful in business without good relationship” and 57% agreed that: “Relationship is more
important than person’s ability to be successful!” Because the number of family relatives and
people from the same province is limited, the most common way to build relationship is
getting acquaintance. In Vietnam is very famous proverb: (When you should carry out some
duties)“The best way is finding an acquaintance and the second one it having power”. It
means that having the right connection is more important than having power, because it might
15
Vu Bich Thuy, Nguyen Van Chan (1997), Le system de valuers Vietnamien et ses implications au management – MBA thesis, CFVG Paris
16
look more innocent! The bad side of relationship is corruption. Culture factors, such as gift
giving habit, necessarily of relationship network…and poverty create a fertile environment for
corruption, especially in economic booming after the Renovation policy. Transparency
International 2005 Corruption Perception Index ranked Vietnam as 107/159 surveyed
countries.
Recently, with many government policy reforms to improve the business environment,
Vietnamese businessmen are getting less dependable on relationship, as in the author’s 2005
survey, the respondents do not rate as high the general role of personal relations to maintain
business relations (both at 2.35), but when asked if relations are more important than profit,
they, and especially the VN-managers, favour to some extent the relations (SC: 2.81;VN:
2.22 ) (average 2.40).
Another evidence of higher uncertainty avoidance is superstition spreading among
businessmen in Vietnam. In Quang’s survey 2003, 44% believed that “One can be successful
or not depends on his fate”, 17% said that: “Choosing good day and worshiping is essential
for business success”. As Chinese people, Vietnamese believe in geomancy. It is long tradition
and the unstable business environment only encourages it develop.

Individualism/Collectivism: As mentioned above, Vietnam belongs to group
which emphasizes the collectivism, where group is more important the individual. In
traditional culture, the importance ranking could be: the most important group is family, then
home village and organization. Nobody could be recognized without the group he/she belongs
to. Group’s interest should be considered as more important than individual’s interest. And
group consensus should be reserved by any mean. The collectivism is most clear through
Vietnam – Korean survey on negotiation process in 2005. Most of Vietnamese answered that
the negotiations team should be around 2–5 persons or more, while most Western chose oneperson team. Collectivism is also legalized in Vietnam. While in most of countries, the
director/manager’s signature is enough for company documents’ legalization, but in Vietnam a
organization’s seal is needed more. It could be a new practice for foreigners in Vietnam.
Collectivism appeared just on decision-making process survey. Even though Vietnam
and Western partners would select a collective decision making process, but Vietnamese
considered the collective to be responsible for decisions, while Westerns though that
individual should be responsible for decisions. Therefore, decision-making process from
Vietnamese normally takes longer. However, in private sector firms in Vietnam, individuals
are also responsible for decision-making, because the power is concentrated in one person.
Decision-making process in those firms is also shorter.
Studying collectivism in Vietnam, Tuan and Napier (2003) had an interesting view.
They were teaching many short courses for businessmen and business students in Vietnam,
17
then had a chance to observe participants’ behaviour for long time. They stated that, usually
people assumed that “group” or “collectivism” equates to “team” but it isn’t so. In fact, when
Americans and Vietnamese talk about team and team building, they mean different things.
Americans expect “collective societies” to mean “team of people working toward a common
goal”. But to Vietnamese, it means living or working together but not necessarily toward some
common goals. When there was a goal, the focus was on following direction from a leader
rather than acting as a team in western meaning. Then Vietnamese know more about, how to
be a part of “group” but little about, how to be a part of the “team”. Tuan and Napier believed
that part of this stems from different starting points of Americans and Vietnamese in their
existing groups. Americans think themselves as individuals first, not as a member of a group.
Asians think themselves as belonging to some groups first (e.g. family or company). Thus to
form a team in America means putting people in a new group with a goal. But to form a team
in Vietnam means to pull people from their group to the new one, facing with new people, and
then they should spend more time to know each other before being able to do some tasks. As a
result, American teams can come together and move on quickly, while Vietnamese “group
called team” should spend more time for starting and move on very slowly. The issue is
supported by the findings in the author’s survey in 2002. Answering the question: “Do you
think you work more company or for yourself?” 61.2% said they work for company’s goal; but
66% believed that “One’s ability could be revealed the best when he works by himself”,
instead of working in team! 46% people in Quang’s survey 2003 believed that “Working alone
is easier than working in team!” Clearly, high score in collectivism doesn’t breed good team
work!
However, when individualism or collectivism are considered, special attention should
be paid to the opinions of Triandis and colleagues. According to him, collectivism and
individualism are not two contrary sides, but they might co-exist with different degrees in one
culture. He compared the collectivism with ice and individualism with water (Triandis 1986).
When the living conditions were still difficult, people need to keep with each others similar to
water molecules are ice bounded to survive. In such case collectivism is heightened. But when
the living conditions become easier, the demand for independence increases, they will separate
from each other similar to water and tend to be more individual. Therefore, there is no surprise
when many foreigners commented that after Renovation period, Vietnamese people tend to be
more individual than before.

Masculinity/Femininity: As mentioned above, Vietnam belongs to the group
with medium score of masculinity. The most obvious factor of Masculinity/Femininity is
gender equality. Thank Ho Chi Minh’s policy of Women liberalization, women in Vietnam
have had better position in society than in some other Asian countries. According to the law,
women have the same right as men in education, job and career. But women are free in some
18
social duties, appointed only for men such as joining in army. In CFVG survey, 92% people
agree that if a man and a woman do the same job, having the same level education, should get
the same salary. But in fact, there are still many social barrier for women development in
Vietnam. Women, especially those living in country side or in undeveloped provinces, have
much less chance for education than men.
Table 3: Comparison between men and women in education level in Vietnam
Unit: percentage (%)
Women
Men
Illiterate
4.8
2.9
Not completed Primary school
20.8
16.3
Primary school level
29.2
29.6
Lower Secondary school level
31.1
33.4
Secondary school level
11.49
14.43
High school or University level
2.57
3.36
Post graduate level
0.05
0.11
Source: Vietnam Economics Times 26 of June, 2000
From the table, we can see that there is much less women get in higher education level
than men. Especially, the rate of illiterate or not finished primary school women are much
higher than men. In poor villages, parents tend to give more chance for boys to go to school
than for girls, because they still believe that, girls sooner or later would get married and
shouldn’t get higher education. It is one of the reasons, why women are less successful than
men in career. The findings from the survey for the national research KX-07-14, more than
80% of companies’ owners were men. Only 23.9% of private companies had female director.
In the state sector, the rate was even lower, only 18.8% states companies had female
directors16! Women usually have less chance to be promoted than men because the thinking
that women have better stay at home to take care of children and house work than devote for
management task, is still popular in Vietnam. In fact, most of successful women at work
confess that they have to sacrifice a lot on the family side. One female director of a private
company with good family based on current social opinions (husband is a deputy director in
the same company, with two children, one is undergraduate and one postgraduate students
16
Vu Quoc Tuan (2000), Vietnamese businessmen in new era, Vietnam National politic Press, page87-89
19
abroad) recognized that little time devoting to her children is one of failures in her career. This
fact prevents many Vietnamese women in developing their career.
But this dimension expresses more than only gender equality. Culture with low
masculinity normally extols modesty, harmony, and do not encourage competition, meanwhile
culture with high masculinity has vice verse tendency. In Vietnam - Korean survey 2005,
answering the question “Does competition among employees usually does more harm than
good?” most of Korean indicated that competition should not be encouraged while
Vietnamese support competition. To answer the question “In your workshop, if a worker
damaged the machine carelessly, in your point of view who will be responsible for this
damage?”, Korean confirmed that they would not fine anybody, but they would remind that
person, meanwhile Vietnamese confirmed that this worker and even their manager should be
responsible for such damage. The different view in those matters could arise some conflict in
joint ventures management in Vietnam.
5.2.2. Korean Business culture
Power distance: Even in Hofstede research, both Korea and Vietnam has
medium score in power distance but in practice, it seems the Korean score is obviously higher
than the Vietnamese, maybe because the Confucianism influence in Vietnam was weakened
during 20th century, under influence of French, American and socialistic values, while in
Korea, the Confucian values are still very strong and dominant. Confucianism creates a clear
hierarchical system, in family, in company, in society and everybody should follow it. As in
Vietnam, the ranking system in Korea is based on two factors: position and age, but it seems
position factor is more important than age. Confucianism sees father as the central figure in
the family, he has to lead the family with authority and respect. Similarly, the company’s
owner has to lead his company with authority and fulfill the employees’ need. In return,
employees should respect and obey the owner. Then in Korean company, even the senior
employee should follow the supervisor and could not expect a contrary way. In Confucian
ranking, a person’s social status is defined by his/her education and occupation, it’s why all
Koreans have very strong motivation for good education. In all companies, employees are
selected and promoted on the basis of academic achievement and written examinations.
Education becomes a mean to get on higher hierarchical level, too.
But recently, under the influence of industrialization and Westernization, the traditional
Confucian values have been changed. As a result, education became less important in Korean
people’ mind. In 1995, a survey was conducted by Chung and other at Tonyang Nylon
Company (TNC) of 300 employees (100 managers and 200 workers). The findings showed
that only 58% TNC employees agreed education was a critical factor for career success, while
22% disagreed and 20% were lukewarm toward education. About 70% of TNC employees
20
though individual’s ability and effort were the most or the 2nd important factors for being
successful. 39% though interpersonal competence was the most important factor.
Uncertainty avoidance: In compare with other Asian countries, such as China,
Thailand, Taiwan, Korea has rather higher score in uncertainty avoidance (85/112). One
evidence for it that’s the yon-go relation (relation – based behaviour) is very strong. Having
yon-go relation, people can trust and being close to each other. In Korea, yon-go relation is
based on family relation at the first, then to people of common education (alumni) and
regional origin (birth place) (It’s called FAR by Chang & Chang, 1994). Studying at the same
school (especially the same University or high school) or being born and raised at the same
province are the factors to promote trust and belongingness as the best17. Till now, the yon-go
relationship is still pervasive in Korean society. For instance: Korean major political party
used to be organized not on ideological but regional line. Core leaders of the ruling party used
to be from the southeast region of Korea, while the leaders of the opposition parties mostly
from the southwest region. In many cheabols, power is concentrated among the owner’s
family members, their school alumni and friends from the same home region (Chang and
Chang 1994). While the sense for belongingness could promote harmony within the FAR
group, it fosters a sense of exclusion toward the other. The Korean are very cold toward
strangers, both Koreans and foreigners (Bae, 1992). In Trust Base Scale, if family members
have the score form 96 to 100, classmates have 50 up to 97 (the highest level is for classmate
of high school), people form the same region have 70, but Korean strangers have only 5 and
foreign strangers have 1 only18. The tendency might arise from the nation homogeneity and
the history of being separated from most of other countries. But nowadays, at a firm level, it
could lead to nepotism and favoritism in promotion and decision-making process. As a social
level, the tendency could promote a strong nationalism and create xenophobic policy. A
natural consequence of relationship is corruption. Recently, there are some roaring scandals of
corruption in Korea. Transparency International 2005 Corruption Perception Index ranked
Korea as 40/159 surveyed countries
Another evidence for uncertainty avoidance is fatalism. As in many other Asian
countries, Korean people believe in fatalism. Every year, before the entrance examination to
University many parents, especially mothers, come to pagodas, temples or churches pray for
their children to pass the examination. Businessmen often go there to pray for being successful
in doing business. Fengshui is very common in Korea, too.
But recently, under the influence of industrialization and Westernization, the attitude
toward yon-go relation and its effect on nepotism and favoritism is questioned. The findings of
TNC survey showed that, only 16% of TNC employees (8% of managers and 20% of workers)
17 Kae H. Chung and other, Korean Management – Global Strategy and Cultural Transformation, Walter de Guyter, Berlin – New York 1997.
18 Chang Sup Chang and Nahn Joo Chang, The Korean Management system – Cultural, Political, Economic Foundations, Quorum Books, Westport, Connecticut, London 1994.
21
considered yon-go as the most or the 2nd important factors for career success. Most of them
cited individual ability, effort and interpersonal competence as determining factors for being
successful in career. But University students, who had not experiences in practice, still put
high importance on yon-go. A study of 3500 students in major Universities in Korea,
conducted on 1990’s years, showed that 47% students considered yon-go is still the most
important factor for career success, while 37% though it was individual’s ability and only 7%
though it was education (Hankook Ilbo, March 8, 1995).
The attitude toward fatalism was changed, too. A Korean Chamber of Commerce and
Industry (KCCI) survey in 1990 showed that 62% of surveyed people rated individual’s ability
was more important than luck and opportunity (Shin, 1991).
- Collectivism/Individualism: In Hofstede study, Korea had very low individualism
score (18/91); It means that Korea belonged to the group of high collectivism. As mentioned
above, in Korea such informal group as family, alumni and region are very important. Among
formal group, working place maybe is the most important one. In Korea, working place is an
important part of individual’s life. In post war time, most people expected to have life time
employment in one company. They were always ready to work overtime, when it is required.
At that time, Korea was the country with the longest working time. As later as 1978, Korean
workers still worked averagely 54 hours/week (KEF, 1995). As consequence, most of workers
should put company ahead their personal life. Till 1997, in TNC survey, 81% people
perceived their company as their “second home”, only 4% rejected this idea and 15% felt it
less strong than the other. 64% agreed that the company’s enhance would enhance their own
growth, only 9% disagreed and 24% were unconcern. But when their income was increased,
people commitment toward job was less strong and the demand for personal life was raised.
The TNC survey showed that only 15% employees were willing to put the company
ahead their personal life, 53% were not willing and 32% had no opinion. The reluctance to
sacrifice for the company among workers was greater than among managers. Only 10% of
workers were ready to sacrifice their personal life against 26% of managers; 61% of workers
were not ready against 33% of managers. Life time commitment to the company was weaker
also. 54% employees (62% of workers and 38% of managers) were ready to leave the
company if they had a better offer; only 18% (14% of workers and 25% of managers) felt to
have life time commitment to the company. But they still showed strong willingness to work
hard and work overtime. 81% of TNC employees (94% of managers and 73% of workers)
were ready to work overtime, only 6% (2% of managers and 8% of workers) expressed their
reluctance. These findings showed that loyalty and lifetime commitment of Korean workers to
their company were declining. And it was more prevalent among younger workers than the
22
elders19. While the economic situation and the globalization process are on speed, loyalty and
lifetime commitment are no longer the strong social norms within Korean workers.
Another aspect of collectivist culture is group – oriented values. Having a collectivist
culture, Korean people are expected to be strongly group – oriented, but a number of studies
pointed out that Koreans tend to be more individualistic than some other of their neighbours,
e.g. Japanese (Kusayanagi, 1980; Kim, 1982; Chang and Chang, 1994). Korean people tend to
have a conflict personality of individualism and collectivism20. The TNC survey showed that
in one side TNC employees respected the group opinion and they are willing to comply with
the group decision. 65% said that they would go along with the group decision, even they
might not agree with it, 24% had no clear opinion and only 11% would resist it. But in another
side, they still kept a room for their own thinking. About 33% of TNC employees stated that
they desire to express their own opinion21. Chang and Chang called it a “salad bowl” type of
group, in which each member shows his or her identity”22.
- Masculinity/Femininity: In Confucian ranking, females are put in lower order than
men. It was reflected in Korean society very clearly. Men are dominated in most of social
activities. It is still very common that men should be the leaders of the families and provide
finance for other family members, while women take care of household and nurtures children.
In work place, even the law guarantees an equal employment for women, but in fact the
gender discrimination is still very strong. Female workers in most of organization are paid less
than their male colleagues (according to Salary Discrepancy 1987, the salary for female high
school graduates was about 60% of male only). Further more, they are expected to withdraw
after getting married.
Table 4: Recruitment of Non - Chaebol corporation23
Education level
University College
Technical college
High school
Total recruitments
20,098
6,557
137,919
Male
Female
19,090
1,008
5,386
1,171
63,000
74,919
Source: The Ministry of Labour,1987
From the table we can see that at both University education and technical college level,
the female amount was much smaller than the male amount. Mostly women were recruited for
low skilled jobs. But recent economic and social changes have opened many job opportunities
for women and the number of female worker has been increasing gradually. However,
19 Kae H. Chung and other, Korean Management – Global Strategy and Cultural Transformation, Walter de Guyter, Berlin – New York 1997.
20 Chang Sup Chang and Nahn Joo Chang, The Korean Management system – Cultural, Political, Economic Foundations, Quorum Books, Westport, Connecticut, London 1994.
21 Kae H. Chung and other, Korean Management – Global Strategy and Cultural Transformation, Walter de Guyter, Berlin – New York 1997.
22 Chang Sup Chang and Nahn Joo Chang, The Korean Management system – Cultural, Political, Economic Foundations, Quorum Books, Westport, Connecticut, London 1994.
23 Chang Sup Chang and Nahn Joo Chang, The Korean Management system – Cultural, Political, Economic Foundations, Quorum Books, Westport, Connecticut, London 1994.
23
employment opportunities for women in Korea are still limited. There are two main barriers
for women in career: the Korean male dominated culture and the lack of commitment to job of
many Korean women. An survey of Korea Employers Federation revealed that the average
tenure of female workers in Korea was only 3.8 years, compared to 6.2 years of male workers
(KEF, 1995). One reason is after getting married, husband and his family would expect her to
get retired from her job. Another reason is many Korean companies are not willing to recruit
married women longer. As a consequence, except in some jobs, typical for women, such as
teacher or nurses, the number of female workers is still very limited.
Under the social change, the general attitude toward women managers has been
changing, too. The TNC study revealed that 40% of surveyed people were willing to accept a
female superior, while 24% rejected and 36% had no opinion. There were no obvious
difference between managers and workers answer in this field. The Korean Chamber of
Commerce and Industry (KCCI) survey revealed somewhat more positive result: 64% though
those women should work when they can find a job, 75% said that they could accept a female
superior. The findings showed that despite the male – dominated minding in Korean
companies, women could have some better chance for their career24.
5.2.3. Comparison of Vietnamese and Korean business culture
Based on the brief description of Vietnamese and Korean business culture, we can see
that in one side, the two cultures have many common values, such as: both cultures have
medium score in power distance, in uncertainty avoidance and masculinity, low score in
individualism; both cultures share many Confucian values; Vietnamese and Koreans have very
strong attitude toward formal education; relationship has very important role in both cultures;
there is a conflict between collectivism and individualism in both cultures; in history, both
countries were separated from the outside, then people are not very comfortable in
communication with foreigners; along with economic development and globalization process,
many traditional values, such as collectivism, power distance, etc are declining… Otherwise,
there are still some delicate but obvious differences:
- Even both cultures share the same Confucian social ranking, but it seems that in
Vietnamese culture, the power distance is less strong than in Korean culture. People
have more freedom to resist their superior, both by the bigger flexibility of Vietnamese
culture and the influence of French, American and socialistic idea of human equality in
20th century.
- Both cultures put stronger importance to relationship, but the essence of relationship
are somewhat different. While Vietnamese people build relationship on family
relatives, acquaintances and people from the same region (especially from the same
24 Kae H. Chung and other, Korean Management – Global Strategy and Cultural Transformation, Walter de Guyter, Berlin – New York 1997.
24
-
-
village), Korean people build relationship based on family relative, alumni and people
from the same region.
The masculinity score in Vietnamese culture is somewhat lower than Korean culture.
Gender discrimination in Vietnam is less strong than in Korea with the same reason as
for lower power distance. In Vietnam, gender equality is not only legalized but
accepted widely in society. Most of people have agreed that if a man and a woman do
the same job, having the same level education, should get the same salary and the
chance for women to have career is much more common.
While Vietnamese culture in general is considered as flexible and friendly toward
foreigners (Vuong, 1990; Borton, 2000), Korean culture is very principal, with little
tolerance for flexibility and compromise (Chang & Chang, 1994). In addition, Korean
people are cold toward foreigners and tend to keep in their group only. It could be
barrier for foreigners in working with Koreans.
5.3. The impact of business culture on Korean companies’ performance in Vietnam
5.3.1. Overview of Korean Investment in Vietnam
Korea was one of the first countries invested into Vietnam after the unification in 1975.
Since 1991, when Vietnam issued Foreign Investment Law, the investment flow of Korea has
been increasing, not only in number of investment fields but also capital value. The main
investment fields were textiles, leather, electronics, real estate and infrastructure. Among them,
the projects of construction and infrastructure most contributed to the growth of Korean
investment in Vietnam.25 Especially, a number of Korean enterprises investing in Vietnam
have risen dramatically since 1995.
Since the Vietnamese Foreign Investment Law was revised in 2005, Korean
investment activities were expanded significantly. The value of the Korean direct investment
was increasing incessantly. More over, Korea always belongs to the top 5 of biggest investors
in Vietnam. Until December 2006, the total direct investment of Korean into Vietnam reached
USD 6 billion, accounting for 10% of total cumulative investment in Vietnam; Since 1988, it
was only ranked after Taiwan, Singapore and Japan. However, most of Korean projects were
medium and small sized ones with the average capital of 6.186 million USD.26 There were
only some large projects, with value of hundreds of million USD, mainly having the
participation of famous corporations, such as: Hyundai, Daewoo, Samsung, LG, and
POSCO… Another characteristic of Korean FDI flows was the unstable speed of investment.
Before the Asian financial crisis in 1997, the investment flows rose suddenly from 1995 to
1996, and this situation repeated in 2002. The total investment of Korean companies has been
25 Do Hoai Nam, Ngo Xuan Binh, Sung – Yeal Koo (2005), Economic cooperation between Vietnam and South Korean in the integration into South Asia.
26 Tran Quang Minh (April, 2007), Economic relationship between Vietnam and South Korea: 15 years of cooperation and development, Magazine of Northeast Asia Research, No 4 (74),
Hanoi.
25
increased at the average rate of 86.55% per year in the period 2000 – 200627. Most Korean
companies’ projects in Vietnam had the duration of ten to thirty years while the other ones had
longer term, from 35 to 70 years. The forms of Korean investments were mainly joint venture
and 100% foreign owned capital. The other characteristics of Korean investment flows was
unequal distribution of the projects, most of them are concentrated in big cities and provinces
like Ho Chi Minh city, Dong Nai, Binh Duong and Hanoi, only some are located in other
provinces, such as Hai Duong, Hai Phong, etc.
In 2006, Vietnam attracted a special attention of Korean companies, with total foreign
direct investment four-fold increase compared to 2005. This result helped Vietnam rank the
third, after China and United States of America among countries and territories getting
investment from Korean enterprises. A recent survey, conducted by Ministry of Planning and
Investment in Vietnam (MPI) showed that, up to 93% of the Korean enterprises running in
Vietnam are satisfied with the business result here. In 2006, the leading field of Korean
investment is heavy industries (55% of total investment), then new urban areas’ construction
(20%), hotels and apartment building (10%) and 15% for the other industries. Before the
economic crisis in Asia, nearly all Korean investors in Vietnam were big corporations such as
Daewoo, LG, and POSCO, investing in heavy industries such as iron, steel, electronics and
cars. 28 Since 2000, most Korean investors are small and medium – sized enterprises, investing
in high labour intensity industries such as fibers, garments, shoes… But it is only for the 1st
stage of investment, we hope it would be changed when the 2nd stage is started. And really,
recently there were some Korean projects invested in high technology industries, such as
information technology and telecommunication with CDMA technology (SK group).
Among forms of Korean companies’ investment in Vietnam, 100% foreign owned
companies is the majority, accounting for 87,5%, the next one is joint venture,12% and the
rest is representative office, only for 0.5%. Within 200 projects of Korean enterprises in
Vietnam in 2006, there were only 24 new joint venture companies, all the rest of projects were
100% foreign owned companies29. With the new investment law came in to effect in 1 July
2006, having no discrimination between JV and 100% foreign owned companies, it can be
expected that the number of 100% foreign owned companies would be increased.
5.3.2. Evaluation of Korean investment into Vietnam
 Achievements
 Constant increase in new registered capital
With a power in capital and technology, the investment flows of Korean enterprises
into Vietnam grew strongly with large new registered capital day by day. Since 1991, in
registered FDI capital per year, Korea often ranked second or third. But in 2006, this country
27 Do Hoai Nam, Ngo Xuan Binh, Sung – Yeal Koo (2005), Economic cooperation between Vietnam and South Korean in the integration into South Asia.
28 Website of South Korean Embassy in Vietnam: http://www.hanquocngaynay.com/hanviet_detail.php?key=3&g_key=3
29 The statistics of Department of Foreign Invesment – Ministry of Planning and Investment of Vietnam (2006)
26
topped over other countries with the total new registered capital of USD 2.78 billion,
accounting for 31% the total FDI capital in Vietnam.30
Table 5: The investment of Korean enterprises in Vietnam from 1998 to 2006
Unit :USD million
Year
Projects
Capital
1998
12
9
1999
27
173.6
2000
34
75.4
2001
75
1,163
2002
149
2,673
2003
171
3,444
2004
170
493
2005
190
5,516
2006
207
2,780
Source: The statistics of Ministry of Planning and Investment of Vietnam.
 Korea top in the total investment capital and projects from 1988 till now.
According to the latest statistics from Foreign Investment Department of Ministry of
Planning and Investment, until Dec 22nd 2007, Korea has reached the top among the countries
and territories investing in Vietnam, with the total registered capital of USD 11.03 billion. The
number of activating projects was 1,635, ranking second after Taiwan. 31 This was really a
good signal because South Korea always lied in the top five largest countries investing directly
in Vietnam.
Looking at the development tendency of Korean companies’ investment capital, along
with the move of Korean enterprises in Vietnam in the past time, some economists forecasted
that there would be a breakthrough in investment of Korea enterprises in Vietnam.
Table 6: FDI of some countries in Vietnam from 1988 to 2007
(Till Dec 22nd 2007)
Unit : USD million
No
Country
Project Capital Charter Capital Performance Capital
1
South Korea
1,635 11,031
4,485
2,946
2
Singapore
525
9,653
3,484
4,068
3
Taiwan
1,719
9,221
4,097
3,172
4
Japan
891
8,718
3,719
5,212
5
Hong Kong
424
5,594
2,071
2,326
6
Britain
319
4,649
1,785
1,443
7
USA
354
2,598
1,312
784
8 The Netherlands
84
2,562
1,466
2,241
9
France
190
2,396
1,450
1,152
10
Malaysia
230
1,819
849
1,136
Source: Department of Foreign Investment – Ministry of Planning and Investment
30 Vietnam Chamber of Commerce and Industry (2007), ‘Vietnam days in South Korea’, page 26
31 The statistics of Department of Foreign Invesment – Ministry of Planning and Investment of Vietnam (Dec, 2007)
27
 The value of projects continuously increase
Among the 10 biggest FDI projects in Vietnam in 2006, Korean companies accounted
for four projects. The value of these projects was all more than USD 1 billion. This has never
happened since 1988.

Project No 1: The leading steel corporation, POSCO surpassed the U.S’s Intel
to become the biggest investor in Vietnam in 2006 with the capital of USD 1.126 billion to
build steel factory in Phu Sy II industrial park (Ba Ria – Vung Tau). This project had the total
area of 1,300,000 square meters and the total duration of 48 years. This project was divided
into 2 stages. In the first stage, POSCO invested USD 340 million, expecting the factory
would have been accomplished by 2009 with the capacity of 700,000 tons per year. In the
second stage, the expected capacity would be 3 million tons per year and the products would
be used in manufacturing cars, household commodities, small diameter pipes and oil drums.
This project could create about 10,000 jobs for Vietnamese people. 32

Project No 2: The group of 5 big Korean construction companies (Daewoo,
Daewon, Kolon, Keangnam, Dongil) invested USD 314 million in the Western West Lake
project, constructing the biggest the new urban area in Hanoi.

Project No 3: The POSCO Corporation’s joint venture project with
VINACONEX Company to construct An Khanh urban area in Ha Tay province. During the
first stage, the capital has reached USD 211.9 million (the total value of the project was USD
2.1 billion). The project was deployed in the area of 207 ha in Tu Liem district, with the
administration centre area of 25 ha, building for 250,000 inhabitants, the commercial centre
and offices. This new urban area would be executed in many stages, expecting that by 2020,
this project would provide 7.600 apartments, garden houses and villas. Including in this
project, the tallest building in Vietnam with 75 floors would be used for business, offices and
international exchange. 33

Project No 4: Korean House Construction Company Booyung invested USD
171 million for Mo Lao new urban area project in Ha Tay province. The total area of this
project was 43,200 square meter. In the period of 50 years, 6 luxurious apartment building
with 30 floors and supporting buildings would be sold and leased. After finished, this new
urban area would provide accommodation for 3,000 families and attract about 100 workers.34

Create jobs for Vietnamese people
The activating projects and foreign investment bases of Korean companies were
recruiting around 96,000 workers, specifically the average number of workers at shoes
factories is 6,729 people and tens of thousand workers in construction and services supply as
well as much more labour people in auxiliary industry. 52.24% of Korean enterprises recruited
32 Vietnam Chamber of Commerce and Industry (2007), ‘Vietnam days in South Korea’, page 31
33 ‘South Korea topped the list of countries and terrorities investing in Vietnam” (Jul 13th 2007)’, website of New Hanoi Magazine http://www.hanoimoi.com.vn/vn/15/137308/
34 ‘Ten biggest projects in Vietnam in 2006’ (Jan 9th 2007), http://www.hapi.gov.vn/portals/default.aspx?portalid=1&tabid=17&newsid=1343
28
less than 100 labourers to work at factories, 11.44% of enterprises recruited more than 1,000
people.35 A large number of Vietnamese labourers have been well – educated in administration
so that they could replace the foreign specialists.

Some side benefits are brought back for Vietnam
In company with the foreign investment sector, the investment flows from Korean
companies had a positive influence on the process of transferring structure, implementing
industrialization and modernization, promoting development, increasing export opportunities,
putting up national budget as well as creating jobs. Korean enterprises in Vietnam took part in
the export activities enthusiastically and quickly affirmed their role in this field. As a result,
the statistics of Foreign Investment Department of Ministry of Planning and Investment on
export activities of 67 Korean foreign invested companies during the period 2001-2003
showed that both revenue and export turnover increased (USD 523 million in 2001 and USD
630.7 million in 2002). Many export offices maximized their quantity, even 100%. In addition,
Korean foreign investment companies annually contributed millions of USD to Vietnamese
national budget36.

Cheap labour force and raw material are main reasons for attracting Korean
investors.
In November and December 2006, the survey of 217 Korean enterprises doing business
in Vietnam was carried out by Embassy of South Korea, KOTRA in Hanoi and Ho Chi Minh
city. 201 enterprises among Korean enterprises doing business in Vietnam stated that they
were recruiting 96,000 employees. If we calculated the total workers in all Korean companies,
the exact number could be over 136,000 people. According to U.S. Department of Labor, the
average compensation cost in Korea in 2006 is USD 14.42, in Philippines is USD 1.07, while
in Vietnam was only about USD 0.337, less than 1/3 of Philippines and equal only 1/50 of
Korean. With more than 136,000 workers, Korean companies could save a enormous labour
cost. Further more, 72 enterprises in survey said that the total value of raw materials purchased
in Vietnam was USD 0.13 billion. 19% of these enterprises would purchase raw and auxiliary
materials in Vietnam. With the advantages, there is no wonder that Korean companies would
consider Vietnam as an attractive destination for investment38.

Limitations
Beside some big achievements and records that investment from Korean companies
has obtained, there still contains some troubles that should be settled.
35 Vietnam Chamber of Commerce and Industry (2007), ‘Vietnam days in South Korea’, page 32
36 Do Hoai Nam, Ngo Xuan Binh, Sung – Yeal Koo (2005), Economic cooperation between Vietnam and South Korean in the integration into South Asia.
37 http://www.bls.gov/news.release/ichcc.t02.htm
38 ‘ Vietnam is an ideal environment for South Korean investors’ (Mar 7th 2007), http://www.viettrade.gov.vn/portal/index.php?option=com_content&task=view&id=40
29
 The scale of the projects are still small
Many projects of Korean companies were small and medium sized ones, having
average capital from USD 5 to 7 million. Recently, in the investment flow from Korean has
appeared some large scale projects, but there are still very few.
 Limitations in the process of activity
In the time of acting in Vietnam, some Korean offices had some regrettable
arguments with the local labors. The main reason was due to the language misunderstanding
and limited knowledge of manners and customs of each other. Besides, mistakes in the
administration at Korean FDI companies have led to many continual strikes. Many rights and
benefits of staff and workers at these companies have not been met.
 Undiversification in fields of investment
In comparison with other countries like Singapore, Taiwan; South Korea mainly
invested in manufacture field especially light industry while investment of this country in
services was little. Therefore, there was an undiversification in fields of investment, which
hasn’t exploited the potential in other fields of Vietnam. In some recent years, this matter
have been solved when many Korean corporations have focused on construction, traffic
transportation, post office, real estate and heavy industry. 39
5.3.3. An overview about Korean companies’ performance in Vietnam
In general, most of Korean companies were satisfied with their performance in Vietnam.
That is the conclusion taken from the survey of 217 Korean enterprises doing business in
Vietnam. The survey was carried out during November and December, 2006 by Embassy of
South Korea, KOTRA in Hanoi and Ho Chi Minh City. The survey also showed up to 93.3%
of Korean enterprises working in Vietnam feel satisfied with their business result here. Around
63, 03% of enterprises considered WTO firm member of Vietnam to be the top favourable
while 61.8% believed the business environment in Vietnam would be improved after WTO
entry. Vietnam’s business environment has been evaluated to be very favourable and open.
Vietnamese government much supported Korean enterprises. Among them, 27.54% said that
in the beginning of investment, they received much support from offices of trade and
investment processing, 23.73% got assistance from ministries and departments, 10.17% were
supported by embassy and consulate of South Korea in Vietnam. Consequently, many large
scale projects of over USD 100 million from Korean companies have increased considerably
in Vietnam. Notably, appeared some huge scale projects with capital of USD 1 billion. A
30
typical example is that the steel factory project of Korean steel POSCO corporation had the
registered capital of USD 1.126 billion. 40
Mr. Kim Young Woong – General Manager of KOTRA stated that the investment
environment of Vietnam was better than that of other ASEAN countries and even China. This
can be due to a skillful, smart and cheap priced labour source, together with a strong
cooperation from the government.
“Normally the investors tend to invest in the countries where they can make more
profits than in their own country. And Vietnam can attract foreign investment due to the fact
that Vietnam is providing open policies towards market economy”, the president of Korea’s
international trade association, Mr. Hee Beom Lee said. In the Korean economists’ opinion,
Vietnam has become the most attractive point of investment in Asia, since large Korean
corporations such as POSCO, Samsung, Lotte, Kumho Asiana and etc… began their new
investment wave in Vietnam. Many Korean enterprises are coming to Vietnam to open their
business activities, improve their investment in major industries. Besides, a lot of SMES are
going to boost their operations in Vietnam by moving some subsidiaries from China to
Vietnam. Since June 1st 2007, a Free Trade Agreement between ASEAN and South Korea
has come into effect. Up to this agreement, South Korea and ASEAN countries (except
Thailand) will remove their tariff barrier towards more than 92% of export and import
commodities by 2010. From June 1st 2007, South Korea exempted tax of 7,991 commodities
among 12,063 items of tax cut and exemption while ASEAN countries cut down taxes by 0 to
5 % towards 45% of commodity list. The Agreement would help Korean enterprises to
improve their performance because import tax of raw materials, machinery equipment into
Vietnam and the export tax from Vietnam to South Korea decreased strongly. 41
Beside the positive results, there are some limitations in Korean companies’
performance in Vietnam. Recently, strikes are a serious problem in Korean companies in
Vietnam. According to statistics, since 1995 up till now, there have been more than 1,000
strikes, from big to small. Only in the first quarter of 2007, there were 103 strikes in 14/64
provinces, cities with a population of 62,700 or more taking turns having strikes. Dongnai is
the province that had the most with 35 strikes, followed by Binhduong with 22 strikes, Ho Chi
Minh City with 26 strikes. 98 out of the 103 strikes were for economic reasons42. Since there
is not any statistic about the number of strikes in Korean companies, but from the Vietnamese
mass media, we can see that Korea and Taiwan are two countries with the highest record for
strikes. Reasons for the situation are originated from both sides:
40 ‘ Vietnam is an ideal environment for South Korean investors’ (Mar 7th 2007), http://www.viettrade.gov.vn/portal/index.php?option=com_content&task=view&id=40
41 ‘South Korea topped the list of countries and terrorities investing in Vietnam’(Jul 13th 2007)’, website of New Hanoi Magazine
http://www.hanoimoi.com.vn/vn/15/137308/
42 http://www.vneconomy.vn/?home=detail&page=category&cat_name=0809&id=452eb1b3a9614e
31

Eager to earn profit in a shorter time, many employers don’t take care enough
of workers’ right. Many companies are lack of labour safety, social insurance, the working
environment is very poor, no allowance for occupational disease, etc. According to the report
of FDI companies in Ho Chi Minh city, till October 2007, there were 39 FDI enterprises from
six countries and territories, including South Korea, France, Taiwan, Hongkong, Australia,
USA, owing to 9,741 workers a social insurance sum of VND 39 billion43.

Due to the imperfectness of legal system in Vietnam, some rules are not met
with the reality, e.g. the minimal wage appointed in Vietnam Investment law is only
USD70/month, disrespected to inflation and recent consumer price rises. Despite obeying
rules of the law, the salary level in many companies is still very low compared to the average
living cost of the labor’s life. Therefore, workers feel dissatisfied with the work place and
disloyal to enterprises.
A typical case is a strike that happened on the morning of July 25th 2007, at Linh
Trung I export processing zone (Thu Duc district, Ho Chi Minh City), by 1,300 workers of
Danu Vina company (a Korean wholly owned company) due to the company’s unreasonable
policy. From July 2007, the company gave a salary increase of VND 50,000, (about USD 3)
for 1 to 5 year workers and VND 70,000, (less than USD 4) for 5 to 7 year workers. However,
this policy was granted only for workers having contracts before July of the previous year. In
addition, a monthly bonus for hard working workers of only VND 25,000 (equal to USD 1.5)
was given; much too low as the average meal cost VND 4,000 (equal to 25 US cent) and was
of very bad quality. Thievery, cause by unsecured locks, and bad sanitation conditions in the
company made workers feel more concerned, upset and angry.
To study the problem, in 2007 the Workers’ and Trade Union Institute under the Viet
Nam Confederation of Labor has conducted a survey in localities that are home to many FDI
enterprises, including Ha Noi, HCM City, and the provinces of Dong Nai, Binh Duong, Ba
Ria-Vung Tau, Vinh Phuc, Bac Ninh and Hai Duong. The findings have shown that: in many
foreign direct investment (FDI) companies’, workers still face low wages, long extra working
hours and a hard life. Up to 45 % of FDI companies, workers have complained about low
wages; in nearly 16 per cent of the companies, workers were dissatisfied about their extra
working hours. Long working hours and low wages, sometimes even lower than in private and
state owned companies, are the main part of the problem. Most of workers in FDI companies
received a low salary from VND 800,000 (USD 50) to VND1,000,000 (USD 62) a month.
Thus, only 30 per cent of the workers in FDI companies can have enough money to offset their
43 39 FDI enterprises still in debt for social insurance of 39 billion VND’, Labour Newspaper No 237, Oct 12th updated at 8h29 AM,
http://www.laodong.com.vn/Home/chinhtri/quochoi/2007/10/59436.laodong
32
daily living costs. To increase the monthly income for essential daily expenses, 42.5 per cent
of the FDI workers have to work overtime, especially those working in garment and leather
enterprises44. In several garment enterprises, the rate of women laborers working extra hours
has reached 55%, many of them have to work 16 hours/day, till falling down unconscious 45.

The cultural difference and the lack of language knowledge of each other are
the other barriers in cooperation. Many Korean enterprises had to face with series challenges
after penetrating Vietnamese market. 22.71% of businessmen in the survey said that their
difficulties originated from the culture differences, while 18.9% of them met difficulty of
language. The real percentage should be much higher, due to the fact that all investors could
spend their time and effort to learn the law, finance system of their counterparts but rarely they
study the language and culture of the partners. Actually, such misunderstandings could happen
every day and easily lead to conflicts and strikes.
A typical case is a strike, happened in Hyundai Vinashin (Khanh Hoa) in 2003 for a
reason that Mr. Choi Gyu Ha, a shop vice foreman has dismissed two workers, after catching
them talking and laughing with two other workers in working time. The Trade Union
representative said that even in 2002, the two workers have been blamed for coming back to
work after taking a nap later about 10 minutes, but in 2003 their job performances were
evaluated as A level46. The case could be considered as cultural misunderstanding. Laughing
in very common habit in Vietnam (Borton, 2000), sometimes only to hide an embarrassment.
In this case, the four workers had stop working because their machine was broken. They were
discussing while waiting for machine fixing. Talking and laughing while discussing about the
machine is a very ordinary thing in Vietnamese culture but it’s looked as undisciplined
behaviour in such uncompromising culture as Korean. The lack of language understanding has
dept the conflict, leading to the regrettable strike.
5.3.4. The impact of business culture on Korean companies’ performance
The findings in this part were taken from our survey about Korean companies in Vietnam,
conducted in 2007, divided in three parts:
 General information:
In 110 survey companies, there were 58 companies located in Hanoi (56%), 13 in
Dongnai (11%) and 19 in Hochiminh City (17%) and 19 in other provinces (Haiphong, Hai
Duong, Binh Duong, etc). There were 77 Korean whole companies, only 20 joint ventures,
44 Report of The Workers and Trade Union Institute, Vietnam General Confederation Labour, 2007
45 Tran Duy, “Female workers falling down unconscious in Korean Company”, www.vnn.vn, Saturday January 19/2008
46 “Unfair dismissal”, Bảo Chân, Laodong Newspaper (No188, 2004)
33
reflected the fact that joint venture is no longer favourable form in FDI in Vietnam (Nhuong,
2006). Most of the companies have experienced in working with foreign partners longer than 5
years (81 companies, equal to 80%). 55 companies (50%) have invested in Vietnam longer
than 5 years, then we can expect that the respondents were somewhat familiar with their
business environment. In the field of investment, most of the surveyed companies were
concentrated in service (20%), garment/textile (14.5%), electronics (11%) and other
manufacturing (23.6%). It is in line with the Report of MPI, mentioned above that Korean
investment fields in Vietnam are not very diversified. Most of surveyed companies were SME,
too: 47 companies (42.7%) have less than 50 employees, 35 companies (31.8%) have from 50
to 200 employees and only 28 companies (25.5%) have more than 200 employees. As it can be
expected, in the workplaces surveyed people should work more with Vietnamese people
(74.5%) and in most of the companies, managers were Korean (78.2%).
 Communication:
The 1st question is that part is about the language used in companies, because language
is the bridge for any communication. But we can see that knowledge of each other language is
quite poor.
Table 7: Languages used in surveyed companies
Language
Korean
Vietnamese
Total
Frequency
Percentage
Frequency
Percentage
Frequency
Percentage
English
9
25%
29
38.7
38
34.6
Korean
4
11%
10
13.3
14
12.7
Vietnamese 3
8%
11
14.7
14
12.7
Mixture
19
56%
25
33.3
44
40
Total
35
100
75
100
110
100
Only 8% of Korean people more less can communicate in Vietnamese, 25% can used English
and 56% should used mixture language, including body language. Vietnamese people are a
little bit better, 14.7% can communicate in Korean, 38.7% in English and 33% should use a
mixture. 8% of Korean and 14% of Vietnamese can use only their mother language. Because
the surveyed people are mostly white collar, the foreign language level is not as well as it can
be expected. But it seemed both sides did not take the matter very seriously. Only 58.33%
34
Korean and 54.9% Vietnamese people though that language is the main barrier in
understanding each other; 16.67% of Korean and 30.14% of Vietnamese were neutral; about
25% of Korean and 15% of Vietnamese did not think so. As foreigner, Korean people seemed
to be aware of this problem slightly better with mean of 2.39 in compare with 2.29 of
Vietnamese. To explain their idea, a Vietnamese shop manager said: “Language could matter
only in the 1st time. As we’re working with machine, the most important thing that we need to
know how to maneuver it. After some time working together, we could understand each other
even we can not know their language”. But in fact it does work only in repeated activities, and
could not work when they’ve got in some conflicts. Further more, it limited their social
relationship and could not help to improve the business environment.
To answer the question: ”In your company, if you disagree with your colleagues or
want to give him a compliment, how do you express it?”, 65.33% of Vietnamese would
express it directly, 4.33 wanted say it indirectly and 29.33 would compromise both. Korean
people were more direct, 80.8% would express it directly, 22.2% would compromise both and
none of them would like to be indirect. Usually, Asian people are not very direct in
communication, they try to imply more than express directly, but it seems that in management,
people are more direct, expressly Korean people. One Korean manager said: “I should say it
directly to help them understand it better. But if it is necessary, I’d tell them only vis a vis”.
With the question “In your company, subordinates always get a detailed job
requirement and instructions to know, what they are expected to do?”, 84% Vietnamese
agreed in compare with 94.4% Korean. It was not in line with other researches, which stated
that Korean managers tend to give only general orders and the subordinates should try to
figure out (Chang and Chang, 1994; Chung & other, 1997) . The Vietnamese, who works in
head offices in Korea, confirmed it, but the Korean managers in Vietnam said that to avoid a
misunderstanding, they should give very detailed requirements.
 Organization culture:

To answer the question: “In your opinion, if someone want to be successful in
business, what should he do?”, 58.33% Korean should plan ahead, 8.4% wanted to be flexible
and 33.33% would do both. Vietnamese people are rather more flexible: 41.33% would plan
ahead, 4% are flexible and 54.67 would do both. It is on line with other researches, saying that
Korean people are much disciplined and with rather higher uncertainty avoidance (Chang and
Chang, 1994; Hofstede, 1997). But with a unstable business environment, Vietnamese are
rather to be more flexible to survive. To answer the question “In your company group
cohesion is more valued than individualism”, 56.8% of surveyed people agreed, 33.2% had no
idea and only 10% disagreed. There was no significant different between Koreans and
Vietnamese opinion.
35

Another evidence for high disciplined culture is concept of time. As being used
of industrialization process, Koreans are famous for their punctuality but Vietnamese are still
very flexible (Borton, 2000). But it’s seemed Vietnamese employees in Korean enterprises
adapted the Korean culture quite well. 77.14% of Koreans said that they should be very on
time in working time in compare with 86.5% Vietnamese. It could be seen as odd that
Vietnamese cared more of being punctual than Koreans, but it was in line with other
researches, too. In fact, people, who are not used to be punctual, would try more to keep with
the norm, while the partners would feel more flexible (Anh, 2006).

The next question about disciplined / flexible culture is:”In your company, a
company's rules should not be broken not even when an employee thinks it is for the
company’s benefit?” 62.85% of surveyed people agreed, 21.1% were neutral and 16.05%
disagreed. There was no significant difference between Vietnamese and Koreans. The findings
showed that Vietnamese adapted Korean business culture quite well. Some of Vietnamese
complained that the norms are very strict but they should obey it.

Having collectivist culture, Vietnamese and Korean people tend to care of their
colleagues. In question “In your opinion, when an employee has some unlucky matters (illness,
accident, etc), what is the appropriate way to share with him?”, 44% Vietnamese would visit
him and contribute some money to help him, 8% would let company’s welfare will take care
of him and 48% would do both, visit him and believe that company’s welfare will take care of
him. But 50% Korean choose visit him and believe that company’s welfare will take care of
him, 38.88% visit him and contribute some money to help him and 11,1% would let
company’s welfare will take care of him. From interviews, Korean said that the habit visits
some illness/unlucky colleague is quite common in Korea but they don’t have the habit to
contribute some money to help the colleagues. We can consider it as a cultural adaptation,
because both habits are very popular in Vietnam, where the welfare system is still imperfect.

The next question about collectivist culture is: “In your opinion, if a worker
damaged the machine carelessly, he should be responsible for this damage?”, 54,45% agreed,
18.18% were neutral and 17.27% disagreed, to show that collectivism is still dominant in
business culture in the companies. But here is a significant difference in Koreans and
Vietnamese answers; The Korean have mean 2.60 at median of 3.00, while Vietnamese have
mean 2.01 at median 2.00, to show that Vietnamese tend to be more individualistic than
Koreans. It is agreed with other researches about Vietnamese management culture, saying that
Vietnamese, especially people from the North, like to clarify individual responsibility from
group responsibility (Thuy and Chan, 1997; Anh, 2006).

Originated from masculine culture, gender discrimination is still common in
both countries and it was reflected in management. To answer the question: “In your
36
companies, men should be encouraged to participate in professional development activities
more than women?” 29.1% of surveyed agreed, 46.4% disagreed and 24.5 were neutral. It
showed that there is still strong gender discrimination in those companies, even it could be less
than in Korea. The interviewees, who worked in headquarter offices in Korea said that there
were very few women, working mainly as secretariat or lower office staff. Women rarely have
a chance to be promoted in higher level management. For instance, in College of Business
Administration of Seoul National University are 49 professors but 48 of them are men, only
one woman (2%)47, while the rate in Foreign Trade University, Hanoi is 33.33%48 . As the
mean for both sides in the survey are the same: 3.37 but Vietnamese has median as 3.00, and
Korean has 4.00 (some respondents did not fill the question) to show that Korean have
stronger gender discrimination than Vietnamese, even they employed many female workers in
Vietnam. A Korean lady, who worked in a Vietnamese tourist company, said that at the
beginning she was very surprised to know Vietnamese women have got more freedom than
Korean ones. She expected as a poor country with Confucian values, Vietnamese women
should accept at least the same treatment as in Korea, but it was not. Some Korean male
managers said that they try to adapt it, but their thinking maybe still took a deep root. On the
other hand, we would expect it to be changed in future, because 23.4% of total people thought
that work would be more effectively managed if there were more women in positions of power
than now, 67.3% had no idea and only 9.3% disagreed. But once more there is a different idea
between Koreans and Vietnamese about gender role. While 25% Vietnamese believed work
would be more effectively managed, if there were more women in positions of power than
now, there was only 19% Koreans agreed with it.

Many researches of Korean management stated that in Korean companies
major rewards are based on seniority (Chang and Chang, 1994; Chung and other, 1997) and
the similar system is still functioned in Vietnam, especially in state section but it does not
work in Korean companies in Vietnam. 61.3% of surveyed people said that in their companies
major rewards are based on performance effectiveness, 6.3% said they are based on seniority
and position and 32.4% though they are based on both. Employees in the companies were
loyal to their companies too. 50.4% of surveyed people felt strong loyalty to their company,
32.4% were neutral and only 17.2 did not feel it. In our survey, Korean people felt slightly less
loyal than Vietnamese, only 47.22% Korean agreed with it in compare with 52.7%
Vietnamese. In the interviews, a Korean employee said that some years ago they used to be
loyal but no longer now, especially when they work abroad, while Vietnamese people still like
stability, they would not quit their job unless they should do it. Vice versa, most of surveyed
people believe in their companies’ loyalty toward them (59.5%), 31.5% had no idea and only
47
48
http://cba.snu.ac.kr:1081/faculty/professors.asp
www.ftu.edu.vn
37
5% did not believe it. It could be considered as a positive factor of the companies’ culture. But
Korean people believed in their companies’ loyalty better than Vietnamese. 76.47% Koreans
said that their employers always showed it’s loyalty toward employees; 23.53% had no idea
and none of them disagreed; while only 54.8 Vietnamese agreed, 37% had no idea and 8.2%
of them disagreed. It may originated from the feeling that the companies would protect Korean
people more than Vietnamese ones. It was reflected on the next question, too. To answer the
question: “Members of your company usually take a great pride in working for the company”,
while 58.4% Koreans agreed, 38.9% took moderate pride and only 2.78% did not take much
pride; only 35.1% Vietnamese agreed, 62.16 took moderate pride and 2.7% did not take much
pride. In the interview, Vietnamese said that they don’t feel to belong to companies as strong
as when they work for Vietnamese company.
 Decision making
Another aspect of business culture is decision making way. It could reflect the
collectivism level, too.

To answer the question “In your company, who will make the final decision in
doing business?”, 89.12% of Vietnamese said that “only top manager”, 6.86% though it was
“group of related people” and 4% though that it’s both. The findings of Koreans were different,
71.4% said that “only top manager”, 5.6% though it was “group of related people” and
22.86% though that it’s both. We can see that collectivism still has strong effect here. The
reason, why Koreans seemed to be more collective here could be raised from lower position of
Vietnamese people in management, then they were not allowed to take part on decision
making process. About the way to make decision, 40% people said that it should be quick and
update, 9.1% said it should be carefully considered and 34.35% though it should be mixture.
There was no significant difference between Vietnamese and Korean idea.

To answer the question: “Which one is the decision making way in your
company?”, 69.16 % said that it is “Individual decision making on individual responsibility”,
15.9% thought it was “Group decision making on group responsibility” and 14.9% thought it
was “Individual decision making on group responsibility”. Again, it has showed the tendency
to adapt a modern management practice, where the leader would have a right to make a
decision and take responsibility of it, despite of the tradition of Group decision making on
group responsibility. There was no significant difference between Vietnamese and Korean
idea here, except Vietnamese tend to have “Individual decision making on group
responsibility” more than Koreans (16.67% against 11.43%), maybe it was a heritage of
socialistic management, where it used to be the common way of making decision.
 Leadership
38

To answer the question: “In your company, one can be a good manager without
having precise answers to most questions that subordinates may raise about their work?”,
39.81% agreed, 35.18% disagreed and 25% were in between. The question was take from
Hofstede study, which has shown that the Westerners used to say “Yes” but the Asians often
say “No”. In Asia, where seniority used to be very important factor for promotion, before
being promoted a manager, workers should work in lower levels and should show their ability
for it. We can see there is still diversification in responses here, but with mean of 2.78 at
median of 3.00 were more preferable to “Yes” than the Koreans (mean 3.21 at median 3.00).
The other researchers of Korean management also said that normal employee in Korean
companies used to be promoted very slowly (Chung and other, 1997) and they should start
from a lower level up to understand his job better. It seemed that Vietnamese preferred a
different way of promotion.

The next question about leadership was “In your country, position people of
power try to keep social distance from less powerful people”, 20% agreed, 45.45% disagreed
and 34.55% had no idea. We can see that power distance is reduced in management now, most
of surveyed people thought that powerful people did not try to keep a distance from the other.
But with mean of 3.17 at median of 3.00, Korean people seemed to protest it less than
Vietnamese with mean of 3.5 and median of 3, showed a higher power distance.

When asked about their opinion, if “In your company, subordinates are
expected to obey their boss without question”, 70% agreed, 13.6% disagreed and 16.4% were
neutral. It was an evidence of very high power distance in Korean companies in Vietnam. But
it was no evidence of different idea between Vietnam and Korea in the question.
 Summarizing questions:
There is very positive factor, that most of surveyed people (61%) thought after
investing into Vietnam, their company’s performance was improved, only 2.7% disagreed and
37.3% said it was remained the same. It was agreed with the survey, conducted by the
Embassy of South Korea and KOTRA office in Vietnam in 2006, in which 93.3% of Korean
enterprises working in Vietnam said they’re satisfied with their business result here. However,
in our survey with mean 2.10 at median of 2.00, Vietnamese seemed to be more satisfied than
Koreans (mean 2.25 at the same median).
The reasons for the success for Vietnamese are listed as:
1. Partner’s relationships
2. Expand new markets
3. Cheap labor/ New working skills (Vietnamese took the new working skills)
4. Innovation in management
5. New business culture
39
6. Improvement of financial situation
7. Innovation in technology
8. New product development
The reasons for the success for Koreans are listed as:
1. Partner’s relationships
2. Expand new markets
3. New business culture
4. Improvement of financial situation
5. Innovation in management
6. Innovation in technology
7. Cheap labor/ New working skills (Koreans took the cheap labour)
8. New product development
We can see that both sides valued the “Partner’s relationships” and “Expand new
markets” as two biggest advantages of doing business in Vietnam. The next ones were
“Innovation in management” and “New business culture”. Both sides did not value
“Innovation in technology” and “New product development” very much. A surprising here is
even “cheap labour” generally is considered as one of the main reasons for Korean investing
into Vietnam, but in the survey both sides did not value it very much. A Korean management
said that with 40 millions people, Korean is not very big market, then for their company’s
development, having new market is very important. Naturally while doing business in
Vietnam, they need the Vietnamese partners’ relationship very much. And Vietnamese people
know that as a developing country, just entering to world market, we need to expand to new
market and get more partner relationships. Most of Vietnamese said in the interview that they
could learn many things from Korean management and business culture; even sometimes they
did not like them. “Innovation in technology” and “New product development” were not
valued very much, because both sides said that they could easily get it by other ways than
cooperation with Vietnam/Korea.
Totally, 33.72% of total surveyed people said that they felt more comfortable in
working with Vietnamese/Korean partners. A Vietnamese higher manager, who has studied in
Pyongyang and could speak Korean very well, said that Vietnam and Korean share many
common cultural aspects, such as using chopstick, celebrating the same holidays (Chuseok,
Lunar New Year,…), following Confucian values, having similar appearance, etc. Many
Korean managers shared the same idea. Another positive factor is very few people disliked to
work with Vietnamese/Korean people (15.11%) and 51.16% said that they felt the same as
working with other foreign partners. But with mean of 2.84 at median of 3.00, Vietnamese
seemed to be less comfortable than Korean (with mean of 2.54 at the same median). In
40
interviews the Vietnamese, having higher education and more experiences in working with
foreigners, likely complained more about Koreans. They said that in compare with Western
companies, Koreans people were too rigid, less equal and did not care of employees enough.
The thing they protested as the most that sometimes they observed Korean manager shouting
and humiliating their subordinates officially. Even as foreigners they were treated better but
they could not accept it. In the contrary, some Koreans complained that Vietnamese were not
very well disciplined. The facts would become a remarkable barrier in Vietnamese – Korean
cooperation in future, if both sides don’t find the way to overcome them.
6.
Discussion and Conclusion
The aim of this sections is to take up for further discussion some of the more interesting
issues revealed by the survey and our interviews. The following issues will be discussed:
 Adapting to the Partner Culture
As mentioned before, in comparative study of Vietnamese and Korean business culture,
the biggest barrier is Vietnam was not included in any profound quantitative research of culture,
then we can only estimate the ranking of Vietnamese culture. From Hostede’ study, we that
Korean culture has medium ranking in Power distance, Uncertainty Avoidance, Masculinity
but low in Individualism and Vietnamese is expected to have similar level, but we could not
make any comparison between them. The findings from the survey had helped us to understand
it better. Firstly, the findings are in line of Hofstede's studies, because they confirmed the
ranking of Korea and Vietnam in the four dimensions of culture in Hofstede's study. The
findings also confirmed other studies, such as Chang and Chang 1994 or Chung and other 1997
about Korean business culture; Borton 2000, Tuan and Napier 2003, etc about Vietnamese
business culture. But in the other hand, the findings have shown some differences between the
cultures, too such as: Korean culture has higher level in power distance and masculinity; other
wise, Vietnamese has higher level in individualism but we don’t have any evidence about the
difference of Uncertainty avoidance. As a consequent, those differences and similarities have
influenced on Korean companies’ performance as it has been shown in 5.3.4 part.
But the findings also reflected culture change of both sides. With Vietnam culture, it
could be because of the influence of globalization process, such as: Vietnamese people tried to
follow the companies’ discipline better, or cared more of being on time, while Korean people
expressed an effort to be flexible in time concept or gender discrimination. With Korean
culture it reflected more an effort to adapt partner’s culture, as the Roman saying: “When in
Rome, do as the Romans do”.
The finding on the mutual attempt of Koreans and Vietnamese to adapt of each of their
cultures is interesting. It confirms the dominant thesis in the inter-cultural management
literature (Gesterland 1996) that it is essential to adapt to the culture in which you have
41
business activities. But the discussion can and should perhaps be taken further on two
dimensions. The first dimension is that of locality, i.e. where the activities are taken place. The
second issue is adaptation an organization culture, too. When a Korean manager is in Vietnam,
Vietnamese cultural norm are followed. But in the other hand, while working in a Korean
company, Vietnamese should adapt the Korean norm also. In the case, maybe the organization
culture has a bigger influence than the national one. This makes sense, not just from the
conventional thinking of adaptation, but from the fact that while an Vietnamese working longer
time in a Korean company, especially when the company’s ruler is very strict, he/she is free of
the practices (although not the values) at home and can take up new practices. We may call it
adaptation, but it seems more appropriate to see it as if the manager has more cultures – or
cultures-in-action. As one manager expressed it: “… when giving a business card to Japanese
partners, I should bend my body. For the first time, I felt uncomfortable, the second time it is
OK and then I am used to that”. (Lam, 2006). We can see the evidence in the responses of
some questions about decision making or organization culture.
 Culture and Management Practice
The study has revealed that in many areas, people of both countries did not show
significant differences when it comes to management practices. There are some reasons for it.
The first one is as mentioned above, while working in Korean companies, the Korean
management style should be dominant and Vietnamese workers should obey it. Further more,
the Korean and Vietnamese culture are mainly considered as similar. In many official meetings
of two countries the similarities was taken as a positive factor for cooperation. But from the
findings of our survey and some previous studies about Vietnamese and Korean business
culture we can see there are some differences, rather subtle but enough for causing conflict in
management, as happened in Vietnam recently. Because there are many literatures about the
similarity both culture and culture is not considered as important factor in doing business, both
sides’ people, especially Korean managers, used to overlook the differences. In fact, when
they’ve got to some conflicts, they used to blame the counterpart for it, e.g. for lacking of
discipline or asking too much, etc. The most obvious evidence for lacking of culture interesting
of each other is: Despite the fact that there were very few people can speak the partner’s or any
other intermediate language, such as English to understand each other, but not many of them
took the matter seriously. And it seems the situation would last for some longer time. Another
factor used to be overlooked in culture that not all similar cultures are attractive to each other,
or it could be quite reverse. Cultural similarity should not be a positive factor in cooperation,
especially in globalization process, while Western values and management practices were very
popular both in Korea and in Vietnam. A Korean PhD student in Seoul National University,
who had got Master degree in Canada, said that sometimes he felt very stress with working
42
culture in Korea. He’d rather move to work in other countries or at least, find a job in some
foreign companies in Seoul than working for Korean company. Based on the fact that young
generation on Korea would prefer the Western management style more than the Korean one,
Korean managers would not expect better idea from Vietnamese workers. Further more, from
our findings there were some differences between Vietnamese and Korean values, needed to be
aware in management. As equalitarian is spread more in Vietnam since 20th century, Vietnam
has lower level in power distance and masculinity. Saving face is very important, too.
Vietnamese people hardly could stand to be shouted and humiliated officially, especially from
foreigners. Korean managers should learn it very carefully, if they want to be successful in
Vietnam. With a higher level in individualism, Vietnamese people would prefer the
performance based reward system more than Korean and better clarifying in individual
responsibility. And despite the fact that Vietnamese people felt more loyal toward companies
but they thought companies were less loyal to them than to Koreans. As a result, Vietnamese
people took less pride in working for their companies. Maybe it is one of reasons, why many
Vietnamese workers move off from Korean companies, as many Korean managers complained
recently.
 Cultural Synergy
In spite of the differences found, the survey did not provide any evidence that the
business culture of both countries has especially negative influence on Korean companies’
performance. This is also indicated by the answer to the question: “In general, when doing
business with overseas partners you feel more comfortable with Korean/Vietnamese partners?”
The answers (VN: 2.45/KR: 2.54) indicate that both sides feel comfortable in doing business
with each other. Further more, most of Korean companies said that they have got a good
financial profit in Vietnam. Findings in our survey have shown that both sides considered
business culture and innovation in management of Korean companies were two of the main
reasons for being successful in Vietnam. In most of the responses, both sides expressed an
effort to adapt with each other, especially Vietnamese side. From our interviews, nearly all
Koreans said that they like to stay in Vietnam for lower living cost, good food, nice beach and
friendly people, some of them tried to learn Vietnamese, and the fact that under influence of
Korean wave (Hallyu), Korean culture and Korean language become more popular in Vietnam
now, we can expect better understanding of both sides in near future to improve the Korean
investment performance in Vietnam.
43
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46
INDEX
Business (kinh doanh): 1, 2, 3, 4, 5, 6, 7, 9, Individualism (Tính cá nhân): 2, 9, 13, 15, 16,
10, 12, 13, 14, 15, 16, 18, 19, 21, 22, 23, 25, 19, 20, 21, 31, 36, 38,
26, 27, 29, 30, 31, 32, 33, 35, 36, 37, 38.
Business culture (văn hóa kinh doanh): 1,3, 4, Korea (Hàn Quốc): 1, 2, 4, 5, 6, 7, 8, 9, 10,
5, 6, 9, 12, 13, 14, 18, 21, 22, 29, 32, 33, 35, 11, 12, 13, 18, 19, 20, 21, 22, 23, 24, 25, 26,
36, 37, 38.
27, 28, 29, 20, 31, 32, 33, 34, 35, 36, 37, 38.
Collectivism (tính tập thể): 13, 15, 16, 19, 20, Leadership (Phong cách lãnh đạo): 2, 6, 8, 12,
21, 32, 33, 34.
34.
Communication (Giao tiếp): 8, 14, 30, 34
Management (Quản trị): 1, 2, 4, 6, 14, 17, 18,
31, 32, 33, 34, 35, 37, 38.
Culture (Văn hóa) : 1, 2, 3, 4, 5, 6, 8, 9, 10, Masculinity (Nam tính): 2, 13, 16, 18, 20, 21,
11, 12, 13, 14, 15, 16, 18, 20, 21, 22, 29, 31, 22, 36, 38.
32, 33, 35, 36, 37, 38.
Decision making (ra quyết định): 2, 8, 15, 33, Organization culture (Văn hóa tổ chức): 2, 31,
34, 37.
37.
Equality (Bình đẳng): 2, 9, 16, 18, 22
Power distance (Phân cấp quyền lực): 2, 13,
14, 18, 21, 22, 34, 36, 38.
Femininity (Tính nữ): 2, 13, 16, 20.
Uncertainty avoidance (E ngại rủi ro): 2, 13,
14, 15, 18, 19, 21, 31, 36.
Gender discrimination (Phân biệt giới tính): 2, Vietnam (Việt Nam):1, 2, 4, 5, 6, 7, 8, 9, 10,
33, 36.
11, 13, 14, 15, 16, 17, 21, 22, 23, 24, 25, 26,
27, 28, 29, 20, 31, 32, 33, 34, 35, 36, 37, 38.
Investment ( Đầu tư): 2, 5, 22, 23, 24, 25, 26,
27, 28, 38
47